Netanyahu leaning 311.
(photo credit: Emile Salman)
Prime Minister Binyamin Netanyahu on Tuesday gave his full support to the
recommendation by the Sheshinski Committee to raise taxes on gas and oil
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“We need to take care of two main needs. One is that of the
entrepreneurs, who invested a lot of their money, and they deserve to see a
return on that. The second is that of Israeli citizens, who are the owners of
the natural resource,” Netanyahu said at a conference in the capital.
believe that the committee has found the right balance between the needs of
Israel’s citizens and investors, and therefore I decided to fully adopt its
He reiterated that he would establish a special fund for
the gas and oil tax revenues that would be used mainly for security and
“We have found gas – and a lot of gas – although maybe not as
much as has been talked about,” the prime minister said.
“This gas should
be used to promote our natural resource, which is the talent and capabilities of
our young generation and future generations. Therefore, I have decided to
establish a fund from gas revenues for Israel’s future. The fund will invest in
elementary schools and high schools, and some of the money will go toward
Over the past week, Netanyahu has held meetings with government
officials and representatives of gas exploration companies in order to come to a
decision over how the nation’s natural resources should be
Following Netanyahu’s recommendation, the cabinet is expected to
approve the Sheshinski Committee’s proposals at the end of the
month. They would then need to be passed into law by the
Knesset. The Finance Ministry expects the final vote to be held in mid-
“There is no doubt that this resource and also gas projects are
strategic targets that Israel’s enemies will attempt to harm,” the prime
minister said. “The defense establishment will be responsible for protecting
At the beginning of the month, the Sheshinski Committee
recommended raising the state’s take on gas profits to between 52 percent and
62%, up from the current 30%.
This would take the form of a progressive
tax on part of the gas and oil companies’ profits, after they recoup 150% of
their investment in a gas-field project.
The tax rate would range from
20% to 50%, depending on the volume of the profits. In addition, the
12.5% royalty tax currently in effect will remain.
Bank of Israel
Governor Stanley Fischer last week expressed his full support of the
proposed fiscal regime on gas and oil profits and called upon the public
not to be
influenced by the “dirty tactics” of interested parties.
that the current situation, in which the state gets a third of gas and oil
profits, the lowest share among developed countries, is not reasonable and not
The governor praised the Sheshinski Committee for finding the
right balance between the need to give entrepreneurs incentives for exploration
while generating reasonable profits and securing a fair share for the public of
revenues generated from natural resources.
Gas exploration companies,
including the Delek Group, have in recent months waged a battle against the
recommendations, putting intensive pressure on decision-makers and threatening
that they will stop the development of projects.
In recent weeks, Finance
Minister Yuval Steinitz, who estimated the value of the recently discovered
natural resources at NIS 700 billion, said that the government would not bend to
the demands by gas exploration companies to make concessions on the Sheshinski
Committee’s recommendations and to exclude the Tamar gas project from the
proposed new fiscal regime.
The Tamar gas site, discovered off Haifa in
2009 by Noble Energy and its Israeli partners – Delek Drilling, Isramco and
Avner Oil Exploration – is estimated to hold 8.5 trillion cubic feet of natural
gas and be capable of meeting the country’s energy needs for the next two
decades. The field is slated to begin commercial gas sales in
National Infrastructures Minister Uzi Landau has been arguing that
levying the new gas tax regime on the Tamar site retroactively would impair
development of natural-gas reserves and delay the delivery of gas to Israel.